Nine Ways IT Outsourcing Can Enhance (or Damage) Your Business

With the constant threat of hackers and hurricanes along the Gulf Coast, it’s not hard to see why executives have turned to outside assistance to help manage their companies’ IT functions. Additionally, IDC reports that 74.6% of business executives mention “data security” as a chief IT concern. According to the Data Governance Institute, 158,048,276 records have been compromised due to security breaches over a 2 ½ year span.

However, we’ve found that evaluating the costs and risks of IT outsourcing in Houston can be uncomfortable for client companies. According to analyst firm Aberdeen Group, 76% of companies said that vendor management effort and costs were much higher than expected. 51% reported that their outsourcer was not performing to expectations. Information Technology accounts for almost 30% of the outsourcing industry. Therefore, it is smart for a business to undergo a "sourcing analysis" to compare its internal risks, service levels and costs to those of external vendors and IT support companies in Houston. It has proven to make the difference between improving – and damaging - your work life.

1

Establish business outcomes to ensure measurability and accountability
Determine the business results you wish to achieve through outsourcing. You should establish business objectives for outsourcing with clearly defined goals. This may sound obvious but having scheduled checkpoints to review the status of your outcomes is an easy way to ensure that the provider meets your standards. Otherwise you run the risk of a he-said, she-said confrontation.

2

Determine the “true” financial savings
The cost of doing business has substantially increased in recent years. While the trend to digitize documents has promised to streamline processes, many are overwhelmed by the related computer problems that hamper productivity. According to Accenture, 25% of executives who outsourced their IT reported first-day improvements in business processes in addition to cost. If reducing cost is one of your objectives, make sure the vendor-promise of lower costs doesn’t compromise efficiency and revenue. Just one hour of downtime costs a 25-employee firm an average of $7500 in lost productivity alone. As one smart IT coordinator of a mid-sized law firm told us, “We pay a premium for IT support to get premium service in return.”

3

Choose a proactive business partner
Clients expect businesses to keep pace with their demands, and still work within very strict budgets and timelines. To combat this, an experienced computer network consultant should be able to identify problems, not just simply react to them. Merely reacting to problems can leave your employees wasting hours waiting for tech support. The provider should have proven skill levels, such as certifications or client references to ensure you avoid becoming their “guinea pig”. Be certain that their services meet your standards by asking the provider to offer a trial period. A proven vendor should have no problem offering a trial of their service or software. Be wary of those who do not.

4

Select a provider that thrives off your success, not your ‘problems’
Make sure your IT provider doesn’t achieve their goals until you achieve yours. “Reactive” IT consultants promise to resolve your IT-related issues. But at what cost? How do you know he or she is truly solving your problems instead of milking them? If a provider’s fee structure is directly linked with the number of computer problems, excuse yourself from the relationship. Review the service-level agreement (SLA). How will the provider monitor, measure and enforce it? Providers should present you accurate and complete information with realistic quotes and proposals.

5

Hire a business partner, not just a provider
Focus as much on strategic outcomes - like improved profitability, productivity and business growth - as you would upfront costs, especially when working with vendors that provide remote PC support, data backup and remote network monitoring. Make sure the service provider understands how you intend to use the deliverables that they are agreeing to provide. 80% of executives surveyed by Accenture expressed commitment to permanent outsourcing. Partner relationships tend to have lasting power. “Providers” are usually only a temporary – and potentially costly – fix.

6

Use a shared-risk approach
According to Gartner, clients see a 15% to 20% reduction in costs by moving to shared IT services. But proceed with caution Good IT partners should help you achieve your goals - at their own risk and cost. Ask what kind of recovery and redundancy means the provider offers. The objectives to be achieved by outsourcing must be quantifiable and established as criteria at the start of the contract. If the customer can compare the performance with the pre-established objective, then the benefits of outsourcing are clear. Failure to meet the established service levels must result in a predefined penalty.

7

Achieve scalability & predictability
Some industries – such as the legal sector - are more prone to merging or disbanding, requiring administrators to take proper action to ensure that the integration or relocation process is done quickly and without disruption. Lesser commitments to fixed costs make outsourcing an attractive alternative. Your outsourcing provider should meet your growth requirements, not just your current situation. Be sure to review the service offerings to make sure that you only pay for what your company needs, allowing for scalability as needed. According to Gartner, you could be paying as much as a 50% premium for so called “added benefits”.

8

Request data when you need it
In many IT outsourcing relationships, such as a disaster recovery consultant, the vendor may protect its client data and applications at a secure, offsite location, such as a datacenter. This safety measure should provide added security– not added stress. For your peace of mind, make sure your provider provides tapes of your data when you need it. Quarterly tapes are typically the standard.

9

Have an “out” strategy
Lastly, remember that your outsourced provider is working for you. One of the greatest anxieties in social commitments is the fear of being “locked in”. The same can be said for business relationships. Create provisions that allow you to terminate the IT outsourcing relationship if certain expectations fall short. Being held captive by an IT consultant or outsourced provider can make you lose your sanity, and in many instances, your job.

We hope you have found this information helpful. If you feel that your current process does not meet these standards, or if you would like more information on IT outsourcing please feel free to contact us: